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Explain with suitable examples the ethical issues in corporate governance. | UPPSC General Studies 4 Mains ETHICS Solutions 2022


Explain with suitable examples the ethical issues in corporate governance.  (UPPSC 2022)


Corporate governance is the set of rules, guidance, policies, and regulations that guide the actions and decisions of organizational management. Corporate governance includes both legal and ethical standards that guide the operations of a company or organization to protect the interests of stakeholders like customers, employees, and the public.

Ethical issues in corporate governance can arise when a corporate prioritize its profits instead of ethics, and they do not uphold its obligations to stakeholders. Here are some examples of ethical issues in corporate governance;

False advertisement; False advertisement about the product can harm the customer, and false advertisement is unethical in corporate governance.

Conflict of interest; If some of the board members of the corporate become supplier to the company, and this may benefit their own business at the expense of the company; this act is an example of a conflict of interest, and it is unethical.

Bribery and corruption; Companies may bribe government officials to get contracts or secure business deals, this unethical issue is widespread in corporate governance.

Insider trading; When company officials use confidential information about the company to buy or sell a stock, this unfair advantage of officials harm investor and it is one of the ethical issues in corporate Governance.

Accounting fraud; Company might overstate its revenue or understate an expanse in order to gain financial results better to attract investors, this accountancy fraud is unethical behavior in corporate governance.

Environmental loss; Company may increase its profit by exploiting the environment unsustainable way, this is unethical behavior in corporate governance.


In conclusion, from the above, we say there are many ethical issues like a false advertisement, conflict of interest, insider trading, and accountancy fraud in corporate governance. It is very important for corporate governance to uphold ethical standards in order to protect the interest of their stakeholder and maintain their trust of stakeholders.


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